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Co-Ownership Flashcards

1
Q

Co-ownership

A

Where we have 2 or more people who own the same piece of land, it is known as co-ownership.

Where there is co-ownership, unity of possession is essential.

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2
Q

Trust of Land

A

Whenever land is co-owned a trust is imposed by statute, according to sections 36(2) and 34(2) Law and Property Act 1925 (“LPA”).

Such a trust is known as a trust of land, according to s1(1)(a) Trusts of Land and Appointment of Trustees Act 1996 (“TLATA”), which separates legal and equitable title to the land between the trustees and the beneficiaries.

In order to create an express trust, the declaration must be evidenced in signed writing as per s53(1)(b).

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3
Q

Initial Acquisition of Legal title

Co-Ownership

A
  • S1(6) LPA tell us that legal title can only be hold by way of joint-tenancy (“JT”).
  • s34(2) LPA 1925 holds that only a maximum of four people can hold legal title.
  • S34(2) also states that if there are more than four names mention on the conveyance, the first four named on the title deed who are of full age and sound mind will hold the legal title as trustees.
  • Full age is 18 according to s1 Family Law Reform Act.
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4
Q

Initial Acquisition of Equitable title

Co-Ownership

A

There is no maximum number of beneficiaries and the equitable title can be held either as joint tenants or as tenants in common.

4 unities must be present for a Joint tenancy (AG Securities v Vaughan)

If only unity of posession, will be a TIC

If different contributiont to purchase price, presumed TIC (Bull v Bull)

Words of severance also suggest TIC

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5
Q

AG Securities v Vaughan

Initial Acquisition of Equitable title

Co-Ownership

A
  • In order to be joint tenants, the four unities must be present
    • Unity of possession – no tenant can be excluded from any part of the land
    • Unity of interest – each tenant has the same estate
    • Unity of time – each tenant’s interest vests at the same time
    • Unity of title – all tenant acquire title under the same document
  • If not, but unity of possession is still present, it will be a tenancy-in-common
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6
Q

Bull v Bull

Initial Acquisition of Equitable title

Co-Ownership

A

If the parties have made differing contributions to the purchase price then there is a presumption of a tenancy in common.

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7
Q

Pink v Lawrence

Initial Acquisition of Equitable title

Co-Ownership

A

Express declarations of trust complying with s53(1)(b) LPA 1925 (signed writing by someone who can declare the trust) prevails over presumptions of joint-tenancy or tenancy-in-common

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8
Q

Payne v Webb

Initial Acquisition of Equitable title

Co-Ownership

A

“in equal shares” are words of severance, indicating a TIC

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9
Q

Fisher v Wigg

Acquisition of Equitable Title

Co-Ownership

A

“to be divided between” are words of severance, indicating a TIC

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10
Q

Heathe v Heathe

Acquisition of Equitable Title

Co-Ownership

A

“share and share alike” are words of severance, indicating a TIC

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11
Q

Re Kilvert Deceased

Acquisition of Equitable Title

Co-Ownership

A

“equally” is a word of severance, indicating a TIC

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12
Q

Lake v Craddock

Acquisition of Equitable Title

Co-Ownership

A

Commercial situations are presumed to be TICs, unless rebutted by express words

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13
Q

Significance of a Joint Tenancy

Co-ownership

A
  • In a JT, the tenants/co-owners constitute one legal owner.
  • On the death of a joint tenant his ownership immediately** passes to the other joint tenants **by right of survivorship** – and not by will, because wills operate **after death (Re Caines)
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14
Q

Significance of a Tenancy in Common

Co-ownership

A
  • In a TIC, each co-owner has a distinct but undivided share in the land, and shares can be unequal.
  • No** right of **survivorship applies.
  • It is possible to be a JT at common law and a TIC at equity
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15
Q

Severance of Legal Title

s36(2) LPA 1925

A
  • A JT can never** be severed **at law (s36(2) LPA 1925), only a beneficial JT can be.
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16
Q

Harris v Goddard

Severance

A
  • Severance separates off the equitable interest of the JT, and only affects the severing tenant – the others are still joint tenants of the rest. The severing tenant becomes a tenant-in-common
    • Unless there are just 2 JTs, in which case they both become TICs.
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17
Q

Goodman v Gallant

Severance

A
  • Severing JT gets an equal share regardless of contribution (unless there is an express agreement to the contrary)
    • E.g. if there are 5 JTs and 1 severs, that 1 has a 20% TiC and the others hold the 80% as JTs, even if the 1 had contributed 75% of purchase price
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18
Q

Death

Modes of Severance

A
  • Legal Title
    • Legal title can only be held by way of joint tenancy (s1(6) LPA 1925)
    • Not possible to sever a legal joint tenancy (s36(2) LPA 1925)
    • Doctrine of survivorship applies – legal title passes to other JTs (re Caines)
  • Equitable Title
    • JT – share will pass to other JTs
    • TIC – share will follow will – either to deceased’s estate or beneficiary
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19
Q

Written Notice

Modes of Severance

A
  • Legal title
    • Not possible to sever a legal joint tenancy (s36(2) LPA 1925)
  • Equitable Title
    • Form – must be in writing although no signature required (re Draper’s Conveyance)
    • Content – must demonstrate an unequivocal and irrevocable intention to sever immediately (Re Draper cf Harris v Goddard)
    • Deliver – must be delivered/left at last known address (s196(3) LPA
      • Has it been ripped up? (Kinch v Bullard)
      • Sent by registered post? Has it been returned? (s196(4) LPA 1925) (Re 88 Berkeley Road)
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20
Q

Re Draper’s Conveyance

Written Notice

Modes of Severance

A
  • Court held that asking for sale and proceeds to be split was sufficient notice under s36(2) LPA 1925
  • Compare with Harris v Goddard
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21
Q

Harris v Goddard

Written Notice

Modes of Severance

A
  • A divorce petition alone was not sufficient notice as it didn’t necessarily mean severing AND it was in the future and severance must be immediate
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22
Q

Kinch v Bullard

Written Notice

Modes of Severance

A
  • Court said notice had been successfully served as had complied with statutory rule; notice had been left at last known abode.
  • Did not matter that wife had ripped up notice
23
Q

Re 88 Berkeley Road

Written Notice

Modes of Severance

A
  • If notice is sent by registered post to last know address, and not returned undelivered, it will be regarded as served (s196(4) LPA 1925),regardless of whether all tenants have seen the notice
24
Q

Williams v Hensman

An Act operating on own share

Modes of Severance

A
  • Legal Title
    • Not possible to sever a legal joint tenancy (s36(2) LPA 1925)
  • Equitable Title
  • A joint tenancy may be severed in 3 ways
    • UNILATERAL act – JT operates on his own share
      • Total Alienation - sold interest
      • Partial Alienation - leased or mortgaged interest
    • MUTUAL agreement of JTs
    • MUTUAL conduct of JTs
25
Q

Total Alienation

An Act operating on own share

Modes of Severance

A
  • If Joint Tenant sells or gives away interest to someone else is effective to sever a JT –
    • Disposition must be in signed writing by the person disposing - s53(1)(c) LPA 1925
    • New person comes in as TIC
26
Q

Ahmed v Kendrick

Total Alienation

An Act operating on own share

Modes of Severance

A

Severance** occurred where **husband forged wife’s signature to sell jointly owned house and the registered transfer

27
Q

Penn v Bristol & West Building Society

Total Alienation

An Act operating on own share

Modes of Severance

A

No severance** where **purchaser colluded in forgery by the husband

28
Q

First National Securities Ltd v Hegerty

Partial Alienation

An Act operating on own share

Modes of Severance

A

Husband purported to mortgage jointly owned property by forging his wife’ signature.

Held to be a charge on his equitable interest only, which severed the joint tenancy

29
Q

Re Gorman

Involuntary Alienation

An Act operating on own share

Modes of Severance

A
  • Bankruptcy – equitable interest will be severed and vest in creditor
  • Husband and wife were co-owners of matrimonial home. Wife had paid for house but transfer of land contained a declaration that they were to hold as joint tenants beneficially.
    • Upon bankruptcy of the husband, trustee was entitled to one half of value of house.
30
Q

Re Draper’s Conveyance

Involuntary Alienation

An Act operating on own share

Modes of Severance

A
  • Divorce proceedings that have become irrevocable can sever joint tenancy.
31
Q

Nielsen-Jones v Fedden

Mutual Agreement/Conduct

An Act operating on own share

Modes of Severance

A
  • Court held there was no agreement to sever as memorandum was to sell the house as a whole.
  • Inconclusive negotiations are not sufficient to sever
  • Compare with Burgess v Rawnsley
32
Q

Burgess v Rawnsley

Mutual Agreement/Conduct

An Act operating on own share

Modes of Severance

A
  • Court said oral agreement to sell and agreement of price at £750 was enough to constitute a mutual agreement at a point in time.
  • Judge stated Fedden wrongly decided, because no specifically-performable contract is actually necessary, just evidence of intention**, so depending on the facts, **inconclusive negotiations may be sufficient to sever
33
Q

Gore & Snell v Carpenter

Mutual Agreement/Conduct

An Act operating on own share

Modes of Severance

A
  • Court said there was no point in time when they could say there was mutual agreement to sever JT
  • Husband and wife - 2 properties. Lived in 1 each after separation
  • Inconclusive negotiations about whether had agreed severance before he died - Mrs Carpenter argued she took both houses as JT; Mrs Snell disagreed
34
Q

Davies v Smith

Mutual Agreement/Conduct

An Act operating on own share

Modes of Severance

A
  • Court held there was mutual agreement to sever because had gone further than agreeing to sell**. They had, **cashed in endowment policy,** **agreed how to split proceeds**, and **consulted solicitors.
35
Q

Hunter v Babbage

Mutual Agreement/Conduct

An Act operating on own share

Modes of Severance

A
  • Court held there was mutual agreement to sever because had agreed to split property** and to **split the proceeds in unequal shares.
  • However, because the husband died before negotiations were completed, court ruled the split had to be on 50:50 basis.
36
Q

What happens at the termination of Co-Ownership?

A
  • When sold the proceeds of sale are split equally between the beneficiaries.
  • A JT ends if there is union in the sole surviving tenant, OR if one tenant acquires all the beneficial interests.
37
Q

Termination of Co-Ownership

Process

A
  • Trustees have power of sale as though they were absolute owners (s6(1) TLATA
  • But must have regard to rights of the beneficiaries (s6(5) TLATA) and consult them to give effect to wishes of majority of beneficiaries insofar as it is consistent with general interests of the trust (s11(1)(b) TLATA
  • What was the purpose of the trust? Is it still the purpose?
  • If there is disagreement, could apply to court for an order of sale (s14 TLATA 1996)
38
Q

s15 TLATA Factors considered by court

Termination of Co-Ownership

A
  • S15(1)(a) intentions of person/persons who created the trust – relevant if have a settlor setting up a trust
  • S15(1)(b) Purpose for which property is held – purpose on acquisition was co-owners could be available for work at short notice
    • Re Buchanan-Wollaston, Re Evers, James v Challenger
  • S15(1)(c) Children –
    • Re Evers – purpose was to be a family home
  • S15(1)(d) Interest of Creditors –
  • Ss15(2) and (3) - circumstances and wishes of beneficiaries –
    • What shares do each have? Is there a majority?
  • Look at all factors in the round and decide what position court are going to take.
  • S15 factors are not weighted. Provisions replaced s30 of LPA under which there was a presumption in favour of sale.
  • BUT case law suggests that courts tend to favour interests of creditors (First National Bank v Achampong, Bank of Ireland v Bell) – court may well favour a sale, if not immediately but at some point in the future.
39
Q

Re Buchanan-Wollaston

s15 TLATA Factors considered by court

Termination of Co-Ownership

A
  • court for order of sale and was refused as purpose of trust was still possible
  • 4 houses in a row overlooking the sea; owners bought the land in front to preserve the sea view and held as tenants-in-common; one of the owners applied to court for order of sale
  • pre-TLATA but can be used for interpretation
40
Q

Re Evers’ Trust

s15 TLATA Factors considered by court

Termination of Co-Ownership

A
  • Courts are reluctant to order a sale when against interests of children
  • Man had left family home and applied for sale of it; court refused as purpose was to provide a family home for the children and that purpose was still continuing.
  • Would have more sympathetic judgement when children were grown up and purpose as family home had been fulfilled.
  • Pre-TLATA but can be used for interpretation
41
Q

Jones v Challenger

s15 TLATA Factors considered by court

Termination of Co-Ownership

A
  • Can’t unilaterally carry on a joint purpose.
  • Purpose of property being bought together was as matrimonial home; bought as JT; wife left and went to live with another man; husband said purpose as matrimonial home was still possible as he wanted her to come back
  • Pre-TLATA but used for interpretation
42
Q

Bank of Ireland v Bell

s15 TLATA Factors considered by court

Termination of Co-Ownership

A

Even though the property was still being used as a family home, the interest of the secured creditor was powerful enough to force the sale

43
Q

First National Bank v Achampong

s15 TLATA Factors considered by court

Termination of Co-Ownership

A

Even though infant children lived in the property, the mortgagee could no longer be kept out of his money

44
Q

Application for Sale by Trustee in Bankruptcy

A
  • Bankruptcy follows different rules.
  • Bankruptcy severs a JT**, **giving the bankrupt a TIC**, which then **vests in the trustee-in-bankruptcy (s306 Insolvency Act 1986) – though the bankrupt remains on the legal title**, the **equitable interest vests in the trustee-in-bankruptcy
    • The trustee-in-bankruptcy will want to sell the land to realise assets, so must seek a S14 TLATA court order, assuming the others oppose a sale.
  • The S15 TLATA orders are not relevant**, so the court will instead **consider the S335A Insolvency Act factors.
45
Q

S335A(2) Insolvency Act 1986 Factors

A
  • The court take into consideration:
    • s335(2)(a) - the interests of the bankrupt’s creditors
    • s335(2)(b)(i) - the conduct of the spouse so far as contributing to the bankruptcy
    • s335(2)(b)(ii) - the needs/financial resources of the spouse
    • s335(2)(b)(iii) - the needs of the children
  • S335A(3) IA 1986 - Creditors’ interests are paramount after 1 year so order of sale very likely to be granted
    • UNLESS exceptional circumstances apply
46
Q

Re Citro

Exceptional Circumstances taking precedent over creditor’s interests

s335A(3) Insolvency Act

Termination of Co-Ownership

A
  • the presence of children** / **interruption of education** is **not exceptional circumstances.
    • Nourse LJ - “They are the melancholy consequences of debt and improvidence with which every civilised society has been familiar.”
    • 6-month delay was ordered
47
Q

Barca v Mears

Exceptional Circumstances taking precedent over creditor’s interests

s335A(3) Insolvency Act

Termination of Co-Ownership

A

Sale ordered even though son had special needs, as postponement would have made creditors wait 3 years**, which would have been **unfair

48
Q

Re Mott

Exceptional Circumstances taking precedent over creditor’s interests

s335A(3) Insolvency Act

Termination of Co-Ownership

A

Judge postponed sale** until after the **seriously ill, elderly bankrupt’s mother** had died. She had also lived in the house for **40 years.

49
Q

Re Raval

Exceptional Circumstances taking precedent over creditor’s interests

s335A(3) Insolvency Act

Termination of Co-Ownership

A

Sale was postponed as time was needed to put in place suitable support for resident with schizophrenia before she moved.

50
Q

Donohue v Ingram

Exceptional Circumstances taking precedent over creditor’s interests

s335A(3) Insolvency Act

Termination of Co-Ownership

A

‘exceptional’ does not include educational needs

51
Q

Ford and Another v Alexander

Exceptional Circumstances taking precedent over creditor’s interests

s335A(3) Insolvency Act

Termination of Co-Ownership

A

ss335A(2) & (3) IA adequately balance the rights of creditors with a debtor’s right to a home and private life, so are compatible with the ECHR.

52
Q

Methods of Overreaching

Termination of Co-Ownership

A
  • If a potential buyer is buying from 2 or more trustees, the buyer will overreach the beneficiaries’ equitable interests and so take the land free of them (ss 2 & 27 LPA 1925)
  • A court ordered sale under s14 TLATA will always constitute an overreaching event (s2(1)(iv) LPA 1925), attaching the beneficial interests to the purchase monies.
53
Q

Overreaching

Protection through Registration

Registered Land

Termination of Co-Ownership

A
  • If a s40 LRA 2002 restriction is entered on the proprietorship register, the buyer must overreach**, or the interests of anyone in occupation are **overriding if the elements of sch 3, para 2 LRA 2002 are present, unless one of the sch 3 exceptions are present.
    • City of London Building Society v Flegg
  • Spouse can protect interest by entering a s32 LRA 2002 notice
54
Q

Overreaching

Protection through Registration

Unregistered Land

Termination of Co-Ownership

A
  • Beneficial interests are not registrable charges at the Land Charges Department because they can be overreached.
  • If they are not overreached, the purchaser will not be bound** if he is **Equity’s Darling.
  • Spouse can protect interest by entering a Class F restriction at Land Charges Registery

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